UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                           FORM 10-Q

[X]   Quarterly  report pursuant to Section 13 or  15(d)  of  the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2000 or

[  ]   Transition report pursuant to Section 13 or 15(d)  of  the
Securities Exchange Act of 1934
For the transition period from ________________to_____________

Commission File Number 0-13299


                DEAN WITTER CORNERSTONE FUND III

     (Exact name of registrant as specified in its charter)


          New York                                13-3190919
(State or other jurisdiction of                (I.R.S. Employer
incorporation or organization)                     Identification
No.)


c/o Demeter Management Corporation
Two World Trade Center, 62 Fl., New York, NY        10048
(Address of principal executive offices)               (Zip Code)


Registrant's telephone number, including area code (212) 392-5454



(Former  name, former address, and former fiscal year, if changed
since last report)



Indicate  by check-mark whether the registrant (1) has filed  all
reports  required  to be filed by Section  13  or  15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.

Yes    X       No__________





<PAGE>
<TABLE>
                DEAN WITTER CORNERSTONE FUND III

             INDEX TO QUARTERLY REPORT ON FORM 10-Q

                       September 30, 2000

<CAPTION>
PART I. FINANCIAL INFORMATION
<S>                                                        <C>
Item 1. Financial Statements

   Statements of Financial Condition
   September 30, 2000 (Unaudited) and December 31, 1999.......2

   Statements of Operations for the Quarters Ended
   September 30, 2000 and 1999 (Unaudited)....................3

   Statements of Operations for the Nine Months Ended
   September 30, 2000 and 1999 (Unaudited)....................4

   Statements of Changes in Partners' Capital for the
   Nine Months Ended September 30, 2000 and 1999 (Unaudited)..5

   Statements of Cash Flows for the Nine Months Ended
   September 30, 2000 and 1999 (Unaudited)....................6

   Notes to Financial Statements (Unaudited)...............7-12

Item 2. Management's Discussion and Analysis of Financial

Condition and Results of Operations.............. 13-21

Item 3. Quantitative and Qualitative Disclosures about
        Market Risk ......................................22-34

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings...................................35

Item 5.  Other Information...................................35

Item 6.  Exhibits and Reports on Form 8-K.................35-36


</TABLE>








<PAGE>
<TABLE>
                 PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                DEAN WITTER CORNERSTONE FUND III
               STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
                                      September 30,      December
31,

2000                                  1999                      $
$
                                    (Unaudited)

ASSETS
<S>                                     <C>            <C>
Equity in futures interests trading accounts:
 Cash                               26,584,379   32,268,788

   Net   unrealized   loss   on  open  contracts   (MS   &   Co.)
(737,149)                                  -
    Net    unrealized    loss    on   open    contracts    (MSIL)
(145,466)                                  -
    Net    unrealized    gain    on   open    contracts    (Carr)
-                                                1,425,611

  Total  net unrealized gain (loss) on open contracts   (882,615)
1,425,611

 Net option premiums                  (96,564)        318,281

     Total Trading Equity           25,605,200   34,012,680

Interest  receivable  (DWR)    108,322                    116,065
Due                            from                           DWR
17,345                                    -

     Total Assets                  25,730,867    34,128,745

LIABILITIES AND PARTNERS' CAPITAL

Liabilities

 Redemptions payable                   423,823      443,758
 Accrued administrative expenses       156,464      138,661
 Accrued management fees                84,965      112,924

      Total Liabilities                665,252      695,343

Partners' Capital

 Limited Partners (9,463.180 and
    10,836.119 Units, respectively) 24,694,788   33,000,637
 General Partner (142.103 Units)       370,827      432,765

 Total Partners' Capital            25,065,615   33,433,402

  Total  Liabilities and Partners' Capital     25,730,867   34,12
8,745

NET ASSET VALUE PER UNIT              2,609.57      3,045.43
<FN>
          The accompanying notes are an integral part
                 of these financial statements.
</TABLE>

<PAGE>
<TABLE>
                DEAN WITTER CORNERSTONE FUND III
                    STATEMENTS OF OPERATIONS
                           (Unaudited)

<CAPTION>



                              For the Quarters Ended September 30,

                                        2000        1999
                                          $            $


REVENUES
<S>                                       <C>         <C>
 Trading profit (loss):
                                                         Realized
167,925                                         (140,237)
    Net change in unrealized        (530,248)   (1,169,348)
      Total Trading Results         (362,323) (1,309,585)
 Interest Income (DWR)                324,000        344,598
      Total Revenues                 (38,323)      (964,987)

EXPENSES

   Brokerage   commissions  (DWR)           331,052       556,565
Management fees                       261,428     351,219
 Transaction fees and costs            17,711      41,564
      Administrative expenses          16,684       20,836
                                  Total    Expenses       626,875
970,184

NET LOSS                            (665,198)  (1,935,171)

NET LOSS ALLOCATION

      Limited   Partners                  (655,551)   (1,911,525)
General Partner                       (9,647)    (23,646)

NET LOSS PER UNIT

      Limited   Partners                    (67.88)      (166.41)
General Partner                       (67.88)    (166.41)


<FN>
          The accompanying notes are an integral part
                 of these financial statements.
</TABLE>
<PAGE>
<TABLE>
                DEAN WITTER CORNERSTONE FUND III
                    STATEMENTS OF OPERATIONS
                           (Unaudited)

<CAPTION>

                            For the Nine Months Ended September 30,

                                       2000           1999
                                          $             $

REVENUES
<S>                                       <C>         <C>
 Trading profit (loss):
     Realized                              (995,629)    (183,542)
Net change in unrealized          (2,308,226)   (1,118,777)
      Total Trading Results       (3,303,855)(1,302,319)
 Interest Income (DWR)   1,026,152                 1,024,396
      Total Revenues              (2,277,703)      (277,923)

EXPENSES

   Brokerage   commissions   (DWR)          1,204,594   1,577,672
Management    fees                          872,463     1,110,193
Transaction fees and costs             66,219   144,499
 Administrative expenses               54,157         58,162
    Total Expenses                  2,197,433  2,890,526
NET LOSS                          (4,475,136) (3,168,449)

NET LOSS ALLOCATION

       Limited    Partners                 (4,413,198)(3,130,722)
General Partner                      (61,938)  (37,727)

NET LOSS PER UNIT

       Limited    Partners                   (435.86)    (265.49)
General Partner                      (435.86)  (265.49)



<FN>


          The accompanying notes are an integral part
                 of these financial statements.
</TABLE>

<PAGE>
<TABLE>
                DEAN WITTER CORNERSTONE FUND III
           STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
     For the Nine Months Ended September 30, 2000 and 1999
                          (Unaudited)



<CAPTION>


                          Units of
                        Partnership Limited   General
                          Interest   Partners Partner    Total

<S>                           <C>        <C>      <C>        <C>
Partners' Capital,
   December 31, 1998  12,335.516        $39,835,572      $464,247
$40,299,819

Net  loss                         -     (3,130,722)      (37,727)
(3,168,449)

Redemptions                 (919.994)                 (2,867,882)
-                        (2,867,882)

Partners' Capital,
  September 30, 1999     11,415.522     $33,836,968   $426,520    $34,263,488





Partners' Capital,
  December 31, 1999      10,978.222$33,000,637$432,765$33,433,402

Net   loss                       -                    (4,413,198)
(61,938)                (4,475,136)

Redemptions
(1,372.939)         (3,892,651)                -         (3,892,6
51)

Partners' Capital,
   September  30,  2000     9,605.283     $24,694,788    $370,827
$25,065,615



<FN>







           The accompanying notes are an integral part
                 of these financial statements.
</TABLE>





<PAGE>
<TABLE>
                DEAN WITTER CORNERSTONE FUND III
                    STATEMENTS OF CASH FLOWS
                           (Unaudited)



<CAPTION>
                            For the Nine Months Ended September 30,

                                       2000           1999
                                          $             $

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                       <C>         <C>
    Net    loss                            (4,475,136)(3,168,449)
Noncash item included in net loss:
    Net change in unrealized        2,308,226 1,118,777
 (Increase) decrease in operating assets:
    Net option premiums               414,845      89,122
    Interest receivable (DWR)           7,743      7,513
    Due from DWR                     (17,345)       3,849
 Increase (decrease) in operating liabilities:
    Accrued administrative expenses    17,803      58,162
    Accrued management fees          (27,959)     (19,930)

        Net  cash  used  for  operating  activities   (1,771,823)
(1,910,956)

CASH FLOWS FROM FINANCING ACTIVITIES

      Increase  (decrease)  in  redemptions  payable     (19,935)
57,467
Redemptions of Units              (3,892,651)  (2,867,882)

  Net  cash  used  for  financing  activities    (3,912,586)   (2
,810,415)

 Net decrease in cash             (5,684,409) (4,721,371)
 Balance at beginning of period    32,268,788  38,504,975
 Balance at end of period          26,584,379   33,783,604



<FN>




          The accompanying notes are an integral part
                 of these financial statements.
</TABLE>



<PAGE>

                DEAN WITTER CORNERSTONE FUND III

                  NOTES TO FINANCIAL STATEMENTS

                           (Unaudited)



The  unaudited financial statements contained herein include,  in

the  opinion of management, all adjustments necessary for a  fair

presentation of the results of operations and financial condition

of  Dean  Witter  Cornerstone Fund III (the "Partnership").   The

financial statements and condensed notes herein should be read in

conjunction  with  the  Partnership's December  31,  1999  Annual

Report on Form 10-K.



1. Organization

Dean   Witter  Cornerstone  Fund  III  is  a  New  York   limited

partnership  organized  to engage primarily  in  the  speculative

trading  of  futures,  options and forward contracts  on  foreign

currencies and other commodity interests (collectively,  "futures

interests").   The  Partnership  is  one  of  the   Dean   Witter

Cornerstone Funds, comprised of Dean Witter Cornerstone Fund  II,

the Partnership, and Dean Witter Cornerstone Fund IV.



The   general   partner   is   Demeter   Management   Corporation

("Demeter").  The non-clearing commodity broker  is  Dean  Witter

Reynolds Inc. ("DWR").  Morgan Stanley & Co., Inc. ("MS  &  Co.")

and  Morgan Stanley & Co. International Limited ("MSIL")  provide

clearing and execution services.  Demeter, DWR, MS & Co. and MSIL



<PAGE>

                DEAN WITTER CORNERSTONE FUND III
           NOTES TO FINANCIAL STATEMENTS (CONTINUED)



are wholly-owned subsidiaries of Morgan Stanley Dean Witter & Co.

The  trading  managers to the Partnership are  Welton  Investment

Corporation  ("Welton")  and  Sunrise  Capital  Management   Inc.

("Sunrise"), (collectively, the "Trading Managers").



2. Related Party Transactions

The Partnership's cash is on deposit with DWR, MS & Co., and MSIL

in futures interests trading accounts to meet margin requirements

as  needed. DWR pays interest on these funds based on current 13-

week  U.S.  Treasury bill rates.  The Partnership pays  brokerage

commissions to DWR.



3.  Financial Instruments

The Partnership trades futures, options and forward contracts  on

foreign  currencies  and other commodity interests.  Futures  and

forwards   represent  contracts  for  delayed  delivery   of   an

instrument  at  a  specified date and price.   Risk  arises  from

changes  in  the  value  of  these contracts  and  the  potential

inability  of  counterparties to perform under the terms  of  the

contracts.   There  are numerous factors which may  significantly

influence the market value of these contracts, including interest

rate volatility.



<PAGE>

                DEAN WITTER CORNERSTONE FUND III
           NOTES TO FINANCIAL STATEMENTS (CONTINUED)


In  June  1998, the Financial Accounting Standards Board ("FASB")

issued  Statement of Financial Accounting Standard  ("SFAS")  No.

133,   "Accounting   for  Derivative  Instruments   and   Hedging

Activities" effective for fiscal years beginning after  June  15,

2000,  as  amended by SFAS No. 137. The Partnership  adopted  the

provisions  of SFAS No. 133 beginning with the fiscal year  ended

December  31,  1998.  SFAS No. 133 superceded SFAS Nos.  119  and

105,  which  required  the disclosure of average  aggregate  fair

values  and contract/notional values, respectively, of derivative

financial  instruments for an entity that carries its  assets  at

fair  value.  SFAS No. 133 was further amended by SFAS  No.  138,

which  clarifies issues surrounding interest rate  risk,  foreign

currency  denominations,  normal  purchases  and  sales  and  net

hedging.  The application of SFAS No. 133, as amended by SFAS No.

137,  did  not  have  a significant effect on  the  Partnership's

financial  statements, nor will the application of the provisions

of  SFAS  No.  138 have a significant effect on the Partnership's

financial statements.



SFAS  No.  133 defines a derivative as a financial instrument  or

other   contract   that   has  all   three   of   the   following

characteristics:





<PAGE>
                DEAN WITTER CORNERSTONE FUND III
           NOTES TO FINANCIAL STATEMENTS (CONTINUED)


  1)    One  or  more  underlying  notional  amounts  or  payment

     provisions;

2)   Requires no initial net investment or a smaller initial net
investment than would be required relative to changes in market
factors;
3)   Terms require or permit net settlement.


Generally derivatives include futures, forwards, swaps or  option

contracts,   or   other   financial  instruments   with   similar

characteristics such as caps, floors and collars.



The  net unrealized gains (losses) on open contracts are reported

as  a component of "Equity in futures interests trading accounts"

on  the  statements of financial condition and totaled ($882,615)

and  $1,425,611  at  September 30, 2000 and  December  31,  1999,

respectively.



Of  the  $882,615  net  unrealized  loss  on  open  contracts  at

September  30, 2000, $637,473 related to exchange-traded  futures

and  futures-styled option contracts and $245,142 related to off-

exchange-traded forward currency contracts.



The entire $1,425,611 net unrealized gain on open contracts at



<PAGE>

                DEAN WITTER CORNERSTONE FUND III
           NOTES TO FINANCIAL STATEMENTS (CONTINUED)




December 31, 1999 related to exchange-traded futures and futures-

styled option contracts.



Exchange-traded futures and futures-styled options contracts held

by  the  Partnership at September 30, 2000 and December 31,  1999

mature  through  September 2001 and May 2000, respectively.  Off-

exchange-traded   forward  currency   contracts   held   by   the

Partnership at September 30, 2000 mature through December 2000.



The Partnership has credit risk associated with counterparty non-

performance.  The credit risk associated with the instruments  in

which  the  Partnership  is involved is limited  to  the  amounts

reflected in the Partnership's statements of financial condition.



The  Partnership also has credit risk because DWR, MS & Co.,  and

MSIL   act   as   the   futures  commission  merchants   or   the

counterparties, with respect to most of the Partnership's assets.

Exchange-traded futures and futures-styled options contracts  are

marked  to  market  on  a daily basis, with variations  in  value

settled  on  a  daily basis. DWR, MS & Co., and MSIL  each  as  a

futures commission merchant for all of the Partnership's exchange-

traded   futures   and  futures-styled  options  contracts,   are

required,



<PAGE>

                DEAN WITTER CORNERSTONE FUND III
           NOTES TO FINANCIAL STATEMENTS (CONCLUDED)


pursuant   to  regulations  of  the  Commodity  Futures   Trading

Commission ("CFTC"), to segregate from their own assets, and  for

the sole benefit of their commodity customers, all funds held  by

them  with  respect to exchange-traded futures and futures-styled

options   contracts,  including  an  amount  equal  to  the   net

unrealized  gain  (loss) on all open futures  and  futures-styled

options   contracts,  which  funds,  in  the  aggregate,  totaled

$25,946,906  and $33,694,399 at September 30, 2000  and  December

31,  1999,  respectively. With respect to the Partnership's  off-

exchange-traded forward currency contracts, there  are  no  daily

settlements  of variations in value nor is there any  requirement

that  an  amount equal to the net unrealized gain (loss) on  open

forward  contracts  be segregated.  With respect  to  those  off-

exchange-traded forward currency contracts, the Partnership is at

risk to the ability of MS & Co., the sole counterparty on all  of

such  contracts,  to  perform.  The  Partnership  has  a  netting

agreement  with MS & Co.  This agreement, which seeks  to  reduce

both  the  Partnership's and MS & Co.'s exposure on off-exchange-

traded forward currency contracts, should materially decrease the

Partnership's  credit risk in the event of MS & Co.'s  bankruptcy

or insolvency.








<PAGE>
Item   2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Liquidity - The Partnership deposits its assets with DWR as  non-

clearing  broker  and  MS & Co. and MSIL as clearing  brokers  in

separate  futures trading accounts established for  each  Trading

Manager,  which assets are used as margin to engage  in  trading.

The  assets are held in either non-interest-bearing bank accounts

or  in  securities  and instruments permitted  by  the  CFTC  for

investment   of  customer  segregated  or  secured  funds.    The

Partnership's assets held by the commodity brokers may be used as

margin   solely  for  the  Partnership's  trading.    Since   the

Partnership's sole purpose is to trade in futures, forwards,  and

options, it is expected that the Partnership will continue to own

such liquid assets for margin purposes.



The  Partnership's investment in futures, forwards,  and  options

may, from time to time, be illiquid.  Most U.S. futures exchanges

limit  fluctuations in prices during a single day by  regulations

referred  to  as  "daily  price fluctuations  limits"  or  "daily

limits".   Trades may not be executed at prices beyond the  daily

limit.  If the price for a particular futures or options contract

has increased or decreased by an amount equal to the daily limit,

positions  in  that futures or options contract  can  neither  be

taken  nor liquidated unless traders are willing to effect trades

at  or  within   the  limit.  Futures  prices  have  occasionally

moved the



<PAGE>

daily  limit  for  several consecutive days  with  little  or  no

trading.   These market conditions could prevent the  Partnership

from  promptly  liquidating its futures or options contracts  and

result in restrictions on redemptions.



There  is  no limitation on daily price moves in trading  forward

contracts  on  foreign currencies.  The markets  for  some  world

currencies  have low trading volume and are illiquid,  which  may

prevent  the  Partnership from trading in potentially  profitable

markets  or  prevent  the Partnership from  promptly  liquidating

unfavorable  positions  in  such markets  and  subjecting  it  to

substantial  losses.   Either of these  market  conditions  could

result in restrictions on redemptions.



The  Partnership  has  never had illiquidity  affect  a  material

portion of its assets.



Capital  Resources - The Partnership does not have, or expect  to

have,  any  capital assets.  Redemptions of additional  units  of

limited  partnership  interest ("Unit(s)")  in  the  future  will

affect  the  amount of funds available for investment in  futures

interests in subsequent periods.  It is not possible to  estimate

the  amount  and  therefore, the impact of future redemptions  of

Units.





                             - 14 -

<PAGE>

Results of Operations

General.   The  Partnership's  results  depend  on  its   Trading

Managers  and  the  ability  of  the  Trading  Managers'  trading

programs  to  take advantage of price movements or  other  profit

opportunities in the futures, forwards, and options markets.  The

following presents a summary of the Partnership's operations  for

the  quarters and nine months ended September 30, 2000 and  1999,

respectively, and a general discussion of its trading  activities

during  each period.  It is important to note, however, that  the

Trading Managers trade in various markets at different times  and

that  prior  activity in a particular market does not  mean  that

such  market  will be actively traded by the Trading Managers  or

will  be  profitable in the future. Consequently, the results  of

operations of the Partnership are difficult to discuss other than

in  the  context of its Trading Managers' trading  activities  on

behalf of the Partnership as a whole and how the Partnership  has

performed in the past.



For the Quarter and Nine Months Ended September 30, 2000

For  the  quarter  ended  September  30,  2000,  the  Partnership

recorded  total trading losses net of interest income of  $38,323

and  posted  a  decrease in Net Asset Value per Unit.   The  most

significant  losses of approximately 2.8% were  recorded  in  the

energy  markets primarily during July from long crude oil futures

positions  as  oil prices decreased amid growing conviction  that

Saudi  Arabia  would follow through with a boost  in  production.

During September, long



<PAGE>

crude oil futures positions resulted in losses as prices reversed

lower  after President Clinton ordered the release of 30  million

barrels  of  oil  in  the  U.S.'s emergency  Strategic  Petroleum

reserve  over  a period of a month.  In the global interest  rate

futures  markets,  losses  of approximately  2.2%  were  recorded

primarily  from  long Australian interest rate futures  positions

during  September as prices declined following a pattern  set  by

U.S.  Treasuries  and as the Australian currency  dipped  to  new

historic lows.  In the global stock index futures markets, losses

of approximately 0.9% were experienced primarily during September

from  long U.S. stock index futures positions as prices  declined

on  jitters in the technology sector and a worrisome spike in oil

prices.   Smaller losses of approximately 0.9% were  recorded  in

the  soft  commodities  markets  primarily  from  trading  coffee

futures  as prices moved erratically during mid-July.  A  portion

of   overall   Partnership  losses  was  offset   by   gains   of

approximately  2.7%  recorded in the currency  markets  primarily

from  short  euro  and Swiss franc positions  during  August  and

September  as  the  value of these European  currencies  weakened

versus  the U.S. dollar and other major currencies amid a cooling

economy  in  Europe  and the European Central  Bank's  stance  on

interest  rates.   Additional gains of  approximately  0.6%  were

recorded  in the metals markets primarily during July from  short

gold  futures positions as prices fell after the Bank of  England

announced the results of its gold auction, which had concluded at

a  lower  price than most dealers expected.  Smaller  gains  were

recorded in the agricultural markets primarily

<PAGE>

from short wheat futures positions during July as prices declined

on  favorable U.S. crop weather forecasts. Total expenses for the

three months ended September 30, 2000 were $626,875, resulting in

a  net  loss  of  $665,198.  The value of a Unit  decreased  from

$2,677.45 at June 30, 2000 to $2,609.57 at September 30, 2000.



For  the  nine  months ended September 30, 2000, the  Partnership

recorded   total  trading  losses  net  of  interest  income   of

$2,277,703  and  posted a decrease in Net Asset Value  per  Unit.

The  most  significant losses of approximately 6.3% were recorded

in  the global interest rate futures markets primarily from  long

U.S.  interest  rate futures positions as prices declined  during

April  amid  fears of higher interest rates.  During June,  newly

established  short U.S. interest rate futures positions  incurred

losses  as  prices  moved higher amid signs  that  U.S.  economic

growth  had  slowed  and fading prospects of additional  interest

rate  hikes  by  the  Federal  Reserve.   Additional  losses   of

approximately  5.8%  were  recorded in  the  global  stock  index

futures  markets  from  long S&P 500 Index futures  positions  as

global  equity  prices  declined during  January  amid  fears  of

interest rate hikes in the U.S. and Europe and profit-taking from

the  previous year.  Prices also declined during April due to  an

unexpected  jump in the Consumer Price Index, fears of  inflation

and   concerns  regarding  interest  rate  increases  and  during

September on jitters in the technology





<PAGE>

sector  and  a  worrisome spike in oil  prices.   In  the  metals

markets,  losses  of  approximately 2.1% were recorded  primarily

from  long  aluminum futures positions as prices  reversed  lower

during  February  on technical factors.  Short  aluminum  futures

positions  resulted in additional losses during  June  as  prices

reversed  sharply higher on institutional buying and  fears  that

U.S.  capacity could be hit further by power shortages.  In  soft

commodities, losses of approximately 1.0% were recorded primarily

from  trading  coffee futures as prices moved erratically  during

mid-July.  Smaller losses of approximately 0.7% were recorded  in

the  agricultural  markets  primarily  from  short  corn  futures

positions as prices increased during January after the USDA  made

a  surprise  cut  to  1999-2000 ending stocks amid  concerns  for

dryness  in  Brazil  and subsequent crop damage.   A  portion  of

overall  Partnership losses was offset by gains of  approximately

1.6%  recorded in the energy markets primarily from long  futures

positions  in  crude oil and its refined products as  oil  prices

powered  to  nine-year  highs on concerns  about  futures  output

levels amid dwindling stockpiles and increasing demand and frigid

weather   in   the   Northeastern  U.S.   Additional   gains   of

approximately   1.2%  were  recorded  in  the  currency   markets

primarily from short euro and Swiss franc positions during August

and  September as the value of these European currencies weakened

versus  the U.S. dollar and other major currencies amid a cooling

economy  in  Europe  and the European Central  Bank's  stance  on

interest  rates.   Total  expenses  for  the  nine  months  ended

September 30, 2000 were $2,197,433,

<PAGE>

resulting  in  a  net loss of $4,475,136.  The value  of  a  Unit

decreased  from  $3,045.43 at December 31, 1999 to  $2,609.57  at

September 30, 2000.



For the Quarter and Nine Months Ended September 30, 1999

For  the  quarter  ended  September  30,  1999,  the  Partnership

recorded  total trading losses net of interest income of $964,987

and  posted  a  decrease in Net Asset Value per  Unit.  The  most

significant  losses of approximately 3.8% were  recorded  in  the

global stock index futures markets primarily from trading S&P 500

Index  futures  as domestic equity prices moved in  a  short-term

volatile  pattern during late July and August due to inflationary

concerns in the U.S.  Additional losses were experienced in  this

market complex during July from long positions in Hang Seng Index

futures  as  Hong Kong equity prices moved lower  due  to  rising

China-Taiwan  tensions  and a decline in China's  gross  domestic

product.    In   global   interest  rate   futures,   losses   of

approximately  2.0%  were recorded primarily during  August  from

short  eurodollar positions as U.S. bond prices moved temporarily

higher  during  mid-month due to benign inflation data.   Smaller

losses  of  approximately  1.5% were  incurred  in  the  currency

markets primarily from short positions in the Swiss franc and the

euro  as  the  value of these European currencies reversed  their

previous downward trend versus the U.S. dollar during July due to

strong  economic data out of Europe and U.S. inflationary  fears.

The losses recorded in this market complex were mitigated by

<PAGE>

gains  recorded from long positions in the Japanese  yen  as  the

value  of the yen strengthened versus the U.S. dollar during  the

quarter  amid optimism regarding the Japanese economy.  A portion

of the Partnership's overall losses for the quarter was offset by

gains  of  approximately  4.0% recorded  in  the  energy  markets

primarily  from  long  positions in crude  oil  and  its  refined

products,  unleaded  gas, heating oil and gas  oil.   Oil  prices

increased during July, August and September, due primarily  to  a

perceived   tightness  in  supply,  increasing  demand   and   an

announcement  by OPEC officials stating that they would  maintain

output cuts until April 2000. Total expenses for the three months

ended  September 30, 1999 were $970,184, resulting in a net  loss

of  $1,935,171.  The value of a Unit decreased from $3,167.89  at

June 30, 1999 to $3,001.48 at September 30, 1999.



For  the  nine  months ended September 30, 1999, the  Partnership

recorded  total trading losses net of interest income of $277,923

and  posted  a  decrease in Net Asset Value per Unit.   The  most

significant  losses of approximately 4.1% were  incurred  in  the

global  interest  rate  futures  markets  primarily  from   short

positions in Japanese government bond futures as prices increased

during January and February.  During January, Japanese government

bond  prices moved higher in a "flight-to-quality" due to renewed

concerns regarding the Brazilian economy.  Prices in this  market

continued  to  increase during February amid growing  speculation

that a rise in Japanese bond yields would result in Japanese

<PAGE>

investors  replacing  international  bonds  with  yen-denominated

debt.    In   currencies,  losses  of  approximately  3.5%   were

experienced  primarily from long British pound positions  as  the

value of the pound weakened versus the U.S. dollar during May due

to  fear  of  an  interest rate cut by the Bank of  England.   In

global  stock  index futures, losses of approximately  3.0%  were

recorded  primarily during July from long positions in Hang  Seng

Index  futures  as  Hong Kong equity prices moved  lower  due  to

rising  China-Taiwan  tensions and a  decline  in  China's  gross

domestic  product.   Smaller losses of  approximately  2.8%  were

incurred  in  the metals markets primarily during May  from  long

positions  in  most base metals as prices declined amid  abundant

supplies  and weak demand.  A portion of these losses was  offset

by  gains  of  approximately 4.7% recorded  primarily  from  long

futures  positions in crude oil and its refined products  as  oil

prices  climbed during the first quarter on news that  both  OPEC

and  non-OPEC  countries had reached an agreement  to  cut  total

output  beginning April 1st.  Oil prices received an added  boost

during  the second and third quarters due to declining  inventory

levels  and increasing demand. Total expenses for the nine months

ended September 30, 1999 were $2,890,526, resulting in a net loss

of  $3,168,449.  The value of a Unit decreased from $3,266.97  at

December 31, 1998 to $3,001.48 at September 30, 1999.







<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
        RISK

Introduction

The  Partnership is a commodity pool involved in the  speculative

trading  of  futures interests.  The market-sensitive instruments

held  by  the  Partnership are acquired for  speculative  trading

purposes only and, as a result, all or substantially all  of  the

Partnership's  assets  are at risk of  trading  loss.  Unlike  an

operating  company, the risk of market-sensitive  instruments  is

central,  not  incidental,  to  the Partnership's  main  business

activities.



The  futures interests traded by the Partnership involve  varying

degrees  of  market  risk.  Market risk is often  dependent  upon

changes  in  the level or volatility of interest rates,  exchange

rates,  and  prices  of  financial instruments  and  commodities.

Fluctuations  in market risk based upon these factors  result  in

frequent  changes  in  the fair value of the  Partnership's  open

positions, and, consequently, in its earnings and cash flow.



The  Partnership's  total market risk is  influenced  by  a  wide

variety  of  factors,  including the  diversification  among  the

Partnership's open positions, the volatility present  within  the

markets,  and the liquidity of the markets.  At different  times,

each  of these factors may act to increase or decrease the market

risk associated with the Partnership.



<PAGE>

The  Partnership's past performance is not necessarily indicative

of  its future results.  Any attempt to numerically quantify  the

Partnership's  market risk is limited by the uncertainty  of  its

speculative  trading.  The Partnership's speculative trading  may

cause future losses and volatility (i.e. "risk of ruin") that far

exceed  the  Partnership's experiences to date or any  reasonable

expectations based upon historical changes in market value.


Quantifying the Partnership's Trading Value at Risk

The    following    quantitative   disclosures   regarding    the

Partnership's  market  risk  exposures  contain  "forward-looking

statements"  within  the meaning of the safe  harbor  from  civil

liability  provided for such statements by the Private Securities

Litigation  Reform Act of 1995 (set forth in Section 27A  of  the

Securities Act of 1933 and Section 21E of the Securities Exchange

Act  of  1934). All quantitative disclosures in this section  are

deemed to be forward-looking statements for purposes of the  safe

harbor, except for statements of historical fact.



The  Partnership accounts for open positions using mark-to-market

accounting  principles.   Any loss in the  market  value  of  the

Partnership's  open  positions  is  directly  reflected  in   the

Partnership's earnings, whether realized or unrealized, and  cash

flow.   Profits  and losses on open positions of  exchange-traded

futures interests are settled daily through variation margin.



<PAGE>

The  Partnership's risk exposure in the market sectors traded  by

the Trading Managers is estimated below in terms of Value at Risk

("VaR").  The  VaR  model used by the Partnership  includes  many

variables that could change the market value of the Partnership's

trading  portfolio.  The Partnership estimates VaR using a  model

based upon historical simulation with a confidence level of  99%.

Historical  simulation involves constructing  a  distribution  of

hypothetical  daily changes in the value of a trading  portfolio.

The  VaR  model takes into account linear exposures to price  and

interest  rate risk.  Market risks that are incorporated  in  the

VaR  model  include equity and commodity prices, interest  rates,

foreign exchange rates, and correlation among these variables.



The  hypothetical changes in portfolio value are based  on  daily

percentage changes observed in key market indices or other market

factors  ("market  risk  factors")  to  which  the  portfolio  is

sensitive.   The  historical observation period of  the  Partner-

ship's  VaR  is  approximately  four  years.   The  one-day   99%

confidence  level  of the Partnership's VaR  corresponds  to  the

negative change in portfolio value that, based on observed market

risk factors, would have been exceeded once in 100 trading days.



VaR   models,   including  the  Partnership's,  are  continuously

evolving  as trading portfolios become more diverse and  modeling

techniques  and systems capabilities improve.  Please  note  that

the VaR model is used to numerically quantify market risk for

<PAGE>

historic  reporting purposes only and is not utilized  by  either

Demeter  or  the Trading Managers in their daily risk  management

activities.


The Partnership's Value at Risk in Different Market Sectors

The  following  table  indicates  the  VaR  associated  with  the

Partnership's open positions as a percentage of total Net  Assets

by  primary  market risk category as of September  30,  2000  and

1999.  At  September  30, 2000 and 1999, the Partnership's  total

capitalization  was approximately $25 million  and  $34  million,

respectively.

     Primary Market       September 30, 2000   September 30, 1999
     Risk Category          Value at Risk         Value at Risk

     Interest Rate              (0.87)%               (0.74)%

     Currency                   (1.42)                (0.87)

Equity                     (0.01)                (0.10)

     Commodity                  (1.56)                (1.11)

     Aggregate Value at Risk    (2.30)%               (1.73)%

Aggregate Value at Risk represents the aggregate VaR of  all  the

Partnership's open positions and not the sum of the  VaR  of  the

individual Market Categories listed above.  Aggregate VaR will be

lower  as  it  takes  into  account correlation  among  different

positions and categories.



The  table  above  represents the VaR of the  Partnership's  open

positions at September 30, 2000 and 1999 only and is not

<PAGE>

necessarily representative of either the historic or future  risk

of  an  investment in the Partnership. Because the  Partnership's

only  business  is the speculative trading of futures  interests,

the composition of its trading portfolio can change significantly

over  any given time period, or even within a single trading day.

Any  changes  in  open positions could positively  or  negatively

materially impact market risk as measured by VaR.



The table below supplements the quarter-end VaR by presenting the

Partnership's high, low and average VaR, as a percentage of total

Net  Assets for the four quarterly reporting periods from October

1, 1999 through September 30, 2000.



Primary Market Risk Category        High      Low      Average

Interest Rate                     (1.12)%   (0.05)%    (0.68)%
Currency                          (1.42)    (0.29)     (0.87)

Equity                            (1.26)    (0.01)     (0.67)

Commodity                         (1.65)    (0.30)     (1.01)

Aggregate Value at Risk           (2.31)%   (1.19)%    (1.93)%


Limitations on Value at Risk as an Assessment of Market Risk

The  face  value  of the market sector instruments  held  by  the

Partnership  is  typically  many  times  the  applicable   margin

requirements.  Margin requirements generally range between 2% and

15%  of  contract face value. Additionally, the use  of  leverage

causes the face value of the market sector instruments held by

<PAGE>

the   Partnership   to  typically  be  many   times   the   total

capitalization   of   the  Partnership.    The   value   of   the

Partnership's open positions thus creates a "risk  of  ruin"  not

typically found in other investments.  The relative size  of  the

positions held may cause the Partnership to incur losses  greatly

in excess of VaR within a short period of time, given the effects

of  the  leverage employed and market volatility.  The VaR tables

above,  as well as the past performance of the Partnership,  give

no  indication  of  such "risk of ruin". In  addition,  VaR  risk

measures   should  be  viewed  in  light  of  the   methodology's

limitations, which include the following:

     past changes in market risk factors will not always result

  in accurate predictions of the distributions and correlations of

  future market movements;

     changes in portfolio value in response to market movements

  may differ from those of the VaR model;

    VaR results reflect past trading positions while future risk

  depends on future positions;

    VaR using a one-day time horizon does not fully capture the

  market  risk of positions that cannot be liquidated or  hedged

  within one day; and

     the  historical  market  risk  factor  data  used  for  VaR

  estimation  may provide only limited insight into  losses  that

  could be incurred under certain unusual market movements.



<PAGE>

The VaR tables above present the results of the Partnership's VaR

for  each  of the Partnership's market risk exposures and  on  an

aggregate basis at September 30, 2000 and for the end of the four

quarterly   reporting  periods  from  October  1,  1999   through

September  30, 2000.  Since VaR is based on historical data,  VaR

should  not  be viewed as predictive of the Partnership's  future

financial  performance or its ability to manage or monitor  risk.

There can be no assurance that the Partnership's actual losses on

a  particular day will not exceed the VaR amounts indicated above

or  that  such losses will not occur more than 1 in  100  trading

days.


Non-Trading Risk

The  Partnership has non-trading market risk on its foreign  cash

balances  not needed for margin.  These balances and  any  market

risk  they may represent are immaterial.  At September  30,  2000

the  Partnership's cash balance at DWR was approximately  90%  of

its  total  Net  Asset  Value.  A decline in short-term  interest

rates  will  result  in  a  decline  in  the  Partnership's  cash

management   income.  This  cash  flow  risk  is  not  considered

material.



Materiality,  as used throughout this section,  is  based  on  an

assessment  of  reasonably  possible  market  movements  and  any

associated  potential losses, taking into account  the  leverage,

optionality and multiplier features of the Partnership's  market-

sensitive instruments.



<PAGE>

Qualitative Disclosures Regarding Primary Trading Risk Exposures

The following qualitative disclosures regarding the Partnership's

market risk exposures - except for (A) those disclosures that are

statements of historical fact and (B) the descriptions of how the

Partnership   manages  its  primary  market  risk   exposures   -

constitute  forward-looking  statements  within  the  meaning  of

Section  27A  of  the  Securities Act  and  Section  21E  of  the

Securities Exchange Act.



The  Partnership's primary market risk exposures as well  as  the

strategies  used  and  to  be used by  Demeter  and  the  Trading

Managers  for  managing such exposures are  subject  to  numerous

uncertainties,  contingencies and risks, any one of  which  could

cause  the  actual results of the Partnership's risk controls  to

differ   materially  from  the  objectives  of  such  strategies.

Government  interventions, defaults and expropriations,  illiquid

markets, the emergence of dominant fundamental factors, political

upheavals, changes in historical price relationships,  an  influx

of  new market participants, increased regulation and many  other

factors  could result in material losses as well as  in  material

changes  to the risk exposures and the risk management strategies

of  the  Partnership. Investors must be prepared to lose  all  or

substantially all of their investment in the Partnership.


The  following  were the primary trading risk  exposures  of  the

Partnership as of September 30, 2000, by market sector.  It may



<PAGE>

be  anticipated  however, that these market exposures  will  vary

materially over time.



Interest Rate.  Exposure was primarily spread across U.S., German

and  Japanese  interest  rate sectors.  Interest  rate  movements

directly affect the price of the sovereign bond futures positions

held  by the Partnership and indirectly affect the value  of  its

stock  index and currency positions.  Interest rate movements  in

one  country as well as relative interest rate movements  between

countries materially impact the Partnership's profitability.  The

Partnership's  primary  interest rate exposure  is  generally  to

interest rate fluctuations in the United States and the other G-7

countries.   The G-7 countries consist of France, U.S.,  Britain,

Germany, Japan, Italy and Canada.  However, the Partnership  also

takes futures positions in the government debt of smaller nations

-  e.g.  Australia.  Demeter anticipates that G-7 and  Australian

interest rates will remain the primary interest rate exposure  of

the  Partnership  for  the foreseeable future.   The  changes  in

interest  rates  that  have the most significant  effect  on  the

Partnership  are changes in long-term, as opposed to  short-term,

rates.   Most  of the speculative futures positions held  by  the

Partnership    are   in   medium-   to   long-term   instruments.

Consequently,  even a material change in short-term  rates  would

have  little effect on the Partnership, were the medium- to long-

term rates to remain steady.



<PAGE>

Currency. The Partnership's currency exposure is to exchange rate

fluctuations, primarily fluctuations which disrupt the historical

pricing  relationships between different currencies and  currency

pairs.   Interest rate changes as well as political  and  general

economic   conditions   influence   these   fluctuations.     The

Partnership  trades  in  a large number of currencies,  including

cross-rates - i.e., positions between two currencies  other  than

the  U.S. dollar.  At September 30, 2000, the Partnership's major

exposures  were  in the euro currency crosses and  outright  U.S.

dollar  positions.  Outright positions consist of the U.S. dollar

vs.  other currencies.  These other currencies include major  and

minor  currencies.   Demeter does not anticipate  that  the  risk

profile   of  the  Partnership's  currency  sector  will   change

significantly  in  the future.  The currency trading  VaR  figure

includes foreign margin amounts converted into U.S. dollars  with

an  incremental  adjustment to reflect  the  exchange  rate  risk

inherent to the dollar-based Partnership in expressing VaR  in  a

functional currency other than dollars.



Equity.   The primary equity exposure is to equity price risk  in

the  G-7  countries.   The  stock index  futures  traded  by  the

Partnership  are  by  law  limited to futures  on  broadly  based

indices.   At  September  30,  2000,  the  Partnership's  primary

exposure  was in the S&P 500 (U.S.) stock index.  The Partnership

is primarily exposed to the risk of adverse price trends or



<PAGE>

static  markets  in the U.S. indices.  Static markets  would  not

cause  major market changes but would make it difficult  for  the

Partnership  to  avoid  being  "whipsawed"  into  numerous  small

losses.



Commodity

Energy.  At September 30, 2000, the Partnership's energy exposure

was  shared primarily by futures contracts in the crude  oil  and

natural  gas  markets.  Price movements in these  markets  result

from political developments in the Middle East, weather patterns,

and  other economic fundamentals.  It is possible that volatility

will  remain  high.  Significant profits and losses,  which  have

been  experienced  in the past, are expected to  continue  to  be

experienced in this market.  Natural gas has exhibited volatility

in  prices resulting from weather patterns and supply and  demand

factors and may continue in this choppy pattern.



Metals.   The Partnership's primary metals market exposure is  to

fluctuations  in the price of gold and silver.  Although  certain

Trading Managers will from time to time trade base metals such as

copper, aluminum and zinc, the principal market exposures of  the

Partnership have consistently been in precious metals,  gold  and

silver.   Exposure was evident in the gold market as gold  prices

continued to be volatile during the quarter.  Silver prices  have

remained volatile over this period, and the Trading Managers



<PAGE>

have  from  time  to time taken positions as they have  perceived

market opportunities to develop.



Soft  Commodities and Agriculturals.  At September 30, 2000,  the

Partnership  had  exposure  in the markets  that  comprise  these

sectors.  Most of the exposure was in the wheat, corn and  cotton

markets.    Supply  and  demand  inequalities,   severe   weather

disruption  and  market expectations affect  price  movements  in

these markets.



Qualitative Disclosures Regarding Non-Trading Risk Exposure

The  following  was  the only non-trading risk  exposure  of  the

Partnership as of September 30, 2000:



Foreign  Currency  Balances.  The Partnership's  primary  foreign

currency  balances are in Japanese yen.  The Partnership controls

the  non-trading  risk of these balances by regularly  converting

these  balances  back  into  dollars  upon  liquidation  of   the

respective position.



Qualitative Disclosures Regarding Means of Managing Risk Exposure

The  Partnership and the Trading Managers separately  attempt  to

manage   the   risk  of  the  Partnership's  open  positions   in

essentially  the  same  manner in all market  categories  traded.

Demeter  attempts  to manage market exposure by diversifying  the

Partnership's assets among different Trading Managers, each of

<PAGE>

whose  strategies focus on different market sectors  and  trading

approaches,  and  monitoring  the  performance  of  the   Trading

Managers  daily.   In  addition, the Trading  Managers  establish

diversification  guidelines, often set in terms  of  the  maximum

margin  to be committed to positions in any one market sector  or

market-sensitive instrument.



Demeter monitors and controls the risk of the Partnership's  non-

trading   instrument,  cash.   Cash  is  the   only   Partnership

investment directed by Demeter, rather than the Trading Managers.

































<PAGE>
                   PART II.  OTHER INFORMATION


Item 1.  LEGAL PROCEEDINGS

Please  refer  to Legal Proceedings previously disclosed  in  the

Partnership's Form 10-Q(s) for the quarters ended March 31,  2000

and  June 30, 2000 and Form 10-K for the year ended December  31,

1999.



Item 5.  OTHER INFORMATION

Commencing  December  1, 2000, the management  fee  paid  by  the

Partnership to each Trading Manager will be reduced from a 4%  to

a 3.5% annual rate.



Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

(A)   Exhibits

3.01   Limited Partnership Agreement of the Partnership, dated as
     of  December  7,  1983, as amended as of  May  11,  1984  is
     incorporated   by   reference  to  Exhibit   3.01   of   the
     Partnership's Annual Report on Form 10-K for the fiscal      year
     ended September 30, 1984 (File No. 0-13299).

10.01       Management  Agreement among the Partnership,  Demeter
     and       Sunrise  Capital Management Inc. formerly  Sunrise
     Commodities   Inc.  dated  as  of  November  15,   1983   is
     incorporated   by  reference  to  Exhibit   10.03   of   the
     Partnership's   Annual  Report  on   Form   10-K   for   the
     fiscal   year  ended  September  30,  1984  (File   No.   0-
     13299).

10.02       Management  Agreement among the Partnership,  Demeter
     and      Welton Investment Systems Corporation dated as of July
     1,    1996 is incorporated by reference to Exhibit  10.02 of the
     Partnership's Annual Report on From 10-K for the fiscal year
     ended December 31, 1997 (File No. 0-13299).




<PAGE>
10.03       Dean  Witter  Cornerstone Funds  Exchange  Agreement,
     dated  as   of May 31, 1984 is incorporated by reference  to
     Exhibit      10.06 of the Partnership's Annual Report on Form 10-
     K for    the fiscal year ended September 30, 1984 (File No. 0-
     13299).

10.05       Amended and Restated Customer Agreement, dated as  of
     December  1,  1997,    between  the  Partnership  and   Dean
     Witter  Reynolds  Inc.  is  incorporated  by  reference   to
     Exhibit  10.05  of the Partnership's Annual Report  on  Form
     10-K for the fiscal year ended December 31, 1998  (File  No.
     0-13299).

10.06       Customer  Agreement, dated as of  December  1,  1997,
     among  the  Partnership, Carr Futures, Inc. and Dean  Witter
     Reynolds      Inc. is incorporated by reference  to  Exhibit
     10.06 of the    Partnership's Annual Report on   Form   10-K
     for  the fiscal  year ended December 31, 1998 (File  No.  0-
     13299).

10.07      International Foreign Exchange Master Agreement, dated
     as of  August 1, 1997, between the Partnership and Carr Futures,
     Inc.  is incorporated by reference to Exhibit 10.07  of  the
     Partnership's Annual Report on Form 10-K for the fiscal year
     ended December 31, 1998 (File  No.  0-13299).

10.08       Customer  Agreement, dated as of May 1, 2000  between
     Morgan    Stanley  & Co. Incorporated, the  Partnership  and
     Dean  Witter  Reynolds Inc. is incorporated by reference  to
     Exhibit 10.07  of the Partnership's Quarterly Report on Form
     10-Q  for  the   quarter ended June 30, 2000, (File  NO.  0-
     13299).

(B)                                       Reports on form 8-K - None.






















<PAGE>









                           SIGNATURE



Pursuant  to the requirements of the Securities Exchange  Act  of
1934, the Registrant has duly caused this report to be signed  on
its behalf by the undersigned, thereunto duly authorized.




                              Dean Witter Cornerstone Fund III
                              (Registrant)

                              By:  Demeter Management Corporation
                                   (General Partner)

November 14, 2000             By:/s/Raymond E. Koch         _____
                                    Raymond E. Koch
                                     Chief Financial Officer





The  General  Partner which signed the above is  the  only  party
authorized  to  act  for the Registrant.  The Registrant  has  no
principal   executive  officer,  principal   financial   officer,
controller, or principal accounting officer and has no  Board  of
Directors.